Washington -- The U.S. House of Representatives today gave its stamp of approval to Sen. Chuck Grassley's legislation to extend for nine months the bankruptcy chapter designed for family farmers and ranchers.

Now, Grassley said he is working to expedite delivery of the bill to the White House for the President's signature.

Grassley's proposal makes the extension of Chapter 12 effective October 1. Chapter 12 expired on September 30, just hours after Grassley won unanimous approval for the proposal from his Senate colleagues.

"Chapter 12 is a proven success as a leverage tool for farmers and their lenders. It helps get the borrower and the banker to sit down and work out alternatives for debt repayment," Grassley said. "The current depression in the farm economy underscores the need to get this safety net on the books for good. Many cash-strapped producers are squeezed to meet operating expenses and pay off bank notes. Today's action by the House was very important."

Before today's vote, the House had voted for a three-month extension. Grassley urged the Speaker of the House and other members to reconsider the issue so that Chapter 12 would not expire on New Year's Eve, when Congress will be out of session and unable to again extend Chapter 12.

Chapter 12 was enacted in 1986, as part of Grassley's effort to help Iowa farmers survive the economic crisis of the mid-1980s. Today, Grassley is leading the effort to make Chapter 12 a permanent part of the federal bankruptcy code. He included his legislation to expand and give permanent status to Chapter 12 in the comprehensive bankruptcy reform bill that he authored with Sen. Robert Torricelli of New Jersey. With debate on that package delayed because of procedural disputes, Grassley two weeks ago introduced the bill that has been passed by the Senate and House.

Unlike Chapter 11 of the bankruptcy code, which governs corporate reorganizations, Chapter 12 does not require a financially distressed farmer to obtain the consent of creditors prior to reorganization. The ability of lenders and other secured creditors to veto a farmer's reorganization plan often led to farm families being forced off their land and out of the business of farming. In addition, unlike Chapter 7 of the bankruptcy code, which is a form of liquidation, a financially distressed farmer doesn't have to surrender the farm to creditors. Chapter 12 prohibits lenders from foreclosing on property if the farmer is able to make rental payments.